You can not use MJPEG-AVI video in Premiere Elements. In order to edit it in Premiere Elements, you will need to convert it to DV-AVI using Windows MovieMaker, per the FAQs to the right of this forum.
Both the Morgan and the MainConcept MJPEG CODEC's work fine in PrPro. I thought that they would work in PrE too. Right now, both are running neck-in-neck, as one user found that Morgan worked, where MainConcept did not, and one user got results from MainConcept, but not Morgan. For all the rest, either has worked 100%.
Personally, I would imagine that the next version of PrPro (and possibly PrE) will contain the MainConcept CODEC, as part of their installations.